Sovcomflot's revenue drop blamed on Western sanctions

Sovcomflot, the largest Russian tanker company, said that Western sanctions against Russian oil tankers are affecting its financial performance. It reported a decline in revenues and earnings.

In February, the United States imposed sanctions against Sovcomflot as part of Washington’s efforts to reduce Russia’s revenue from oil sales which it could use to fund its war in Ukraine.

Sovcomflot's revenue for the nine months of 2012 fell by 22.2%, to $1.22 Billion. Its earnings before interest tax, depreciation, and amortization dropped 31.5%, to $861 MILLION.

Sovcomflot stated in a press release that "the introduction of new sanctions acted as a constraint during the reporting period".

The Group of Seven and its allies set a cap on the price of Russian oil at $60 per barrel. However, enforcing this cap has proven difficult. Sanctions have targeted tankers in particular, such as Sovcomflot vessels.

Igor Tonkovidov, CEO of Sovcomflot, said in June the changing market conditions and sanctions could reduce revenues for this group. He said in April that sanctions affected 8% of the tankers shipping Russian oil.

India receives 60% of the Russian oil exported by sea.

Sovcomflot stated that the company continues to work on a systematic basis in order to meet these challenges. (Reporting and editing by Alexander Marrow, Jonathan Oatis and Jonathan Oatis; Reporting by Gleb Stlyarov)

(source: Reuters)